1st session

PRINCIPLES OF MANAGEMENT

Planning

SYSTEMS APPROACH

Systems Approach to Management

The Systems approach is based on the concept that an organization is a system.

A system is defined as a number of interdependent parts functioning as a whole for some purpose.

A system has 5 components: inputs, a transformation process, outputs, feedback, and the environment.

Organization as a System receives Input, transforms it through a Process for Output and Operates in an Environment (economic, regulatory, competitive, other forces)

Transformation process

Input Output

Feedback (Reenergizing the system)

ENVIRONMENT

System Boundary


Systems Concepts System Boundaries and Subsystems

Systems consist of numerous subsystems.Each subsystem has elements, interactions with

other subsystems, and objectives.Subsystems perform specialized tasks for the

overall system.


Systems and Sub-systems

System 1

CollegeFinanceOpsHRMktg

System 2

ApplePCsLaptopsI-phonesI-pods

System 3

FMCGNorthSouthEastWest

Sub-systems

Inputs and Outputs Outputs are a result of changed inputs

Outputs of one subsystem become inputs to another subsystem.

Outputs must adhere to standards to be useful or acceptable to the next subsystem.

Environment Environment consists of people, organizations and other

systems that supply data to or that receive data from the system

Managers at different levels perceive ‘Environment’ differently


“Inputs”: 5 Ms of Management Inputs (resources managers deal with):

Man: human resources, both inside and outside Materials: raw material, goods (hard & software,

processed or semi-finished) and services required to create the sellable end product

Machines: technology and expertise deployed towards the transformation process

Methods: systems, procedures and processes seamlessly put together for the transformation;

Measurement: score-keeping and in-process monitoring continuously with due feedback to keep on-course on time.

“Money” is required for generating all these Ms – managers need to acquire, deploy, generate and distribute money as a primary need for business


Output for Stake-holders in Business: “Stake-holders”:

Shareholders: are the owners. They have put in their money in the enterprise, expecting better returns from it than from other ventures

Society: includes the State and local governments for the improvement of quality of life of its citizens

Suppliers: continuity of their enterprise depends on the success of the customer enterprise

Customers

Employees: livelihood depends on the success of the enterprise


Output for Stake-holders in Business: There is a “freedom of choice” (for association) between

each of these stake-holders and the enterprise in the longer term:But they sink or swim together in the shorter termLength of term definition varies with individuals


Management as a system transforms inputs: by the process of

Planning Organizing StaffingLeadingControlling

to accomplish pre-determined goals or objectives (based on stakeholders’ needs)


Inputs(Goal

Oriented)

Outputs(External

ToOrgnzn.)

Pla

nn

ing

Org

anizin

g

Sta

ffing

Leadin

g

Contro

lling

Product/Services,Profits, Customer & Societal satisfaction,

Other Long-term Goals

Man, MachineMaterial,Method,

Measurement

Stake holder Feedback (reenergizing the system)

EXTERNAL ENVIRONMENT(Opportunities, Constraints)

StakeholdersShareholders;Society; Customers;Employees; Suppliers


PLANNING

Planning

"Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen" -

Koontz and O'Donnell.

Planning Planning involves selecting objectives or goals

and the course of actions to achieve them:Its is a rational approach to achieving pre-selected

objectives - based on innovation, knowledge and purpose

Choosing the best from alternative course of action is integral to planning

Importance of Planning

Planning provides directions

Planning reduces the risks of uncertainty

Planning reduces overlapping and wasteful activities

Planning promotes innovative ideas

Planning facilitates decision making

Planning establishes standards for controlling.

Types of Plans

OperationalPlans

TacticalPlans

StrategicPlans

Specify actions toachieve tactical plans

(very short-term)

Steps for achieving strategic objectives(usually one year or

less)

Establish long-rangeobjectives

Types of Plans

Mission / Purpose (Strategic Plans)The ‘reason for existence’ of an organization

Type of Plans Objectives/ Goals

The end towards which activity of an organization is aimed, e.g.○ For a Business enterprise – profit, surplus creation;○ For an vocational NGO – to provide means of

livelihood to maximum people in the area they are serving

StrategiesDetermination of the long term objectives and

adoption of a course of actionGives a frame work for linked action-plans,

communicated systematically to guide thinking and actions.

Policies“Plans” that are general directional statements (or

understandings) that guide/help in decision making:○ Repeat decisions taken ‘reflexively’;○ Delegation of tasks without loss of control

Some discretion is permissible depending on circumstances thus encouraging initiative within limits and situational adjustments;

Issues with “Policy”○ Seldom documented in writing○ Subject to interpretations

Type of Plans

ProceduresPlans that are chronological sequences of required

actions: task-oriented in nature;

Cuts across department boundaries (sub-systems) in an organization: e.g. attendance, applying for leave

Procedures and policies are inter related: e.g. authorization for paid leave

RulesSpecific actions or non-actions allowing no discretionWhat is acceptable and what is not?

Type of Plans

ProgrammesAction plans (mainly non-routine or for changed activities)

including, task assignments, steps to be taken, resources to be deployed etc. to achieve a (new/renewed) goal;○ Primary program may require supporting programs,

spreading across the enterprise;○ Perfect coordination between supporting & primary programs

essential to avoid delays, unnecessary costs and expected roll-out.

Programs are a complex of (sub)goals, policies, rules and other elements necessary for the course of action e.g. obtaining ISO certification.

Type of Plans

BudgetsA statement of expected results expressed in

“Numerical terms” e.g. financial operating budget = “profit plan”;

Budgets enforce precision in thinking:○ Making a budget is ‘planning’ by itself;○ Encourages innovation – a “different” way to work

Budgets serve for ‘Control’:○ Enforces discipline in execution of plans;○ Instills cost consciousness;○ Makes people (constantly) plan!

Type of Plans